MNI: PBOC Net Injects CNY28.8 Bln via OMO Thursday

MNI: PBOC Sets Yuan Parity Higher At 7.1854 Thurs; -1.13% Y/Y

MNI BRIEF: Ontario To Cut U.S. Energy Flows When Tariffs Hit

MNI: BRAZIL'S COPOM RAISES SELIC RATE BY 100BPS TO 12.25%

MNI BRIEF: US Budget Deficit $367B In Nov; FYTD Record $624B

MNI China Daily Summary: Wednesday, December 11

MNI:AUSTRALIA NOV UNEMPLOYMENT RATE +3.9%

MNI: US NOV TREASURY BUDGET -$366.8B

EZ/UK Bond Supply Calendar: BTP Auction on Thursday

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Riksbank Preview - Feb 2021: Focus on Q2 purchases

  • At its last meeting in November, the Riksbank extended its target for QE purchases by an additional SEK200bln to SEK700bln, with the additional purchases to take place by the end of 2021. The Riksbank had already announced that it would continue with QE through H1, so in total SEK400bln of net purchases of QE are now confirmed for 2021. The Riksbank also announced that it would front load its purchases in Q1 and purchase SEK120bln of the assets in Q1.
  • The first question for the February meeting will be, how much will the Riksbank buy in Q2? There is a risk that the Riksbank continues to front load its purchases, particularly with the current Covid-19 restrictions. We would not rule out the Riksbank continuing the SEK120bln pace seen in Q1 into Q2 (which would be taken dovishly by the market). However, we think its more likely that the Riksbank will slow purchases to somewhere in the region of SEK80-100bln for Q2. Irrespective of what is announced for Q2 purchases we don't think the total SEK400bln of purchases this year will be changed.
  • The next question is surrounding the repo rate path. We expect this to remain flat for the forecast duration. The Riksbank has left the door open to cut verbally without communicating this through the rate path. As mentioned above, we are only around 1/8 of the way through the 2021 QE programme and the Riksbank (and many other central banks) have argued that negative rates are more effective in the post-pandemic recovery when demand can really be boosted effectively. And pretty sharp rebounds in demand are expected post-pandemic anyway as pent up demand is released and furloughed workers return to work. So at that point it is arguable whether negative rates would be needed at all – which we think its why there is no reflection of negative rates in the repo rate path. It would be seen as a vote of confidence from the Riksbank in the prospects of a recovery if a small uptick was added to the repo rate path towards the end of the forecast horizon. We look for little change to the medium-term growth and inflation forecasts.
For the full Riksbank preview including summaries of 13 sell-side analyst notes, please click the link below:

MNI Riksbank Preview - Feb 2021.pdf

Central Bank PreviewRiksbank - PreviewCentral Bank ReportsMarkets
Central Bank PreviewRiksbank - PreviewCentral Bank ReportsMarkets

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.